„The Ferrari is a dream. People dream of owning this special vehicle and for most, it will remain a dream apart from those lucky few“
– Enzo Ferrari
“Win on Sunday, sell on Monday”.
An adage from the 1950s.
It originated when a close relationship between car racing and automobile sales became apparent. Car manufacturers used it to justify their immense investments in motorsports.
The protagonist in the flourishing of sports car racing during this period was Enzo Ferrari. Since the founding of Scuderia Ferrari under the Alfa Romeo umbrella in 1929, he has established his legacy in design, manufacturing and racing.
Till his death in 1988, Ferrari turned his own name into a legend, and his factory — which today makes 36 Ferraris a day — into a shrine.
Ferraris are built to be envied. As it turns out, the same is true for the company.
Chart 1: Enzo Ferrari in the 1920s

It is not a car – it is a feeling
Ferrari’s end goal is not speed, but arousal: to get the genuine emotion of driving, to feel the thrill of acceleration and the beastly howl of the engine.
They have succeeded in bringing the feeling of race cars from the track to the road.
Legally, of course.
Every new model is sold out before production even starts. Completely forget about limited editions, which are usually reserved for people who already own a couple of Ferraris.
Like a Birkin bag from Hermès or a timepiece from Patek Philippe, limited-edition Ferraris gain value over time. The list of the 20 most expensive cars ever sold at auction includes 10 Ferraris, with three Ferraris in the top 5.
I can imagine treasure collectors getting goosebumps!
Chart 2: Most expensive cars ever sold at auction

One of a kind
Ferrari’s unique business model provides a rare instance of revenue control, albeit with potential brand dilution. Striking the right balance between revenue growth and meeting customer demand is crucial. Long waiting lists for their luxury cars may deter affluent customers, leading them to consider competitors like Lamborghini or Aston Martin with shorter lead times.
Nevertheless, Ferrari’s exclusivity remains sought after. Their first ever sport utility vehicle (SUV) “Purosangue” and a debut electric model to be unveiled in 2025 demonstrate the company’s innovative approach.
By the way, the “Purosangue,” Italian for thoroughbred, will accelerate your kids from zero to 100 km/h in about three seconds.
It is already sold out for the first two years.
The appeal of the Ferrari status symbol and profitability is comparable to that of a luxury goods manufacturer like Louis Vuitton or Hermès.
They are one of a kind in the automotive industry.
Example?
Ferrari does not care if you have enough money to buy one or a couple of their cars. The Italian car manufacturer even has a blacklist of celebrities banned from acquiring a car.
This list includes the Kardashians as well as Justin Bieber.
They showed that they did not want to respect one of Ferrari’s wishes: that owners never simply modify the appearance of their cars at will.
Another one?
Ferrari generates gross profits outside the automotive sector. As mentioned, profitability is more comparable to that of a luxury goods manufacturer.
Chart 3: Automaker Gross Margins & Hermès/LVMH

Dream Dilemma
The world has roughly 21 million high-net-worth individuals growing at 5% annually, providing Ferrari with significant addressable market expansion.
This means up to 1 million potential new Ferrari customers every year. The first problem for these aspiring new Ferrari owners?
The number of cars produced. If you still try to convert 36 cars per day to a year, I will give you the result.
In 2022, it was 13,221 Ferraris.
By comparison, Porsche has sold more than 300,000 units, and Toyota – the world’s best-selling car – more than 10 million vehicles.
The second problem? Over 40% of Ferrari’s annual production are purchased by individuals who already own a Ferrari.
You can see the demand vs supply mismatch.
As Enzo Ferrari said, “The Ferrari is a dream. People dream of owning this special vehicle and for most people it will remain a dream apart from those lucky few”.
As Ferrari’s results announced this week show, the company faces a dream dilemma when it comes to balancing demand and exclusivity.
So many deep-pocketed customers and too little supply give Ferrari substantial pricing power. It insulates earnings from inflation and the negative impact of a recession. The result is long-term stability and high revenue visibility, underscored by a lengthy growth trend.
Undoubtedly, Ferrari enjoys the richest valuation in terms of common metrics in a peer comparison.
Why?
Because luxury knows no crisis.
Chart 4: Ferrari vs Other Automakers since IPO (ex-Tesla)

arvy’s takeaway: Ferrari’s allure as a luxury icon lies in its legendary legacy, exclusivity, and strategic scarcity. Soaring demand and limited production fuel substantial pricing power, making each car an enviable investment. As Ferrari ventures into new territories with the “Purosangue” and electric model, its mystique captivates car enthusiasts worldwide. The question remains: Can Ferrari sustain its unmatched appeal and retain the magic amidst growth and changing automotive landscapes?
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